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What will a new government bring?

What will a new government bring?

By George Selmer FIEP

[This article first appeared in FE News 26 May 2017]

There are lies, damned lies and opinion polls. But the odds are stacked against any party other than the Conservatives forming a government come June 9th. What might that mean for the people that we serve in the employment related services sector and for us as providers of those services?

First of all, whilst there’s only one manifesto likely to be implemented, it’s worth noting that, collectively, all the major manifestos have less to say about active labour market policy than at any time since the 1990s. It’s fair to say that worrying about unemployment appears to going out of fashion.

Victims of our own success or our own failure? We are losing the argument that what we do is necessary and valuable to create a fair and thriving economy.

The Labour manifesto contains some interesting, welcome and worthy stuff on welfare policy (overhauling the discredited WCA/PIP system, addressing an unfair and ineffective sanctions regime and addressing some cuts to out of work benefits) and skills (including a ‘National Education Service’, increased funding for adult education and more active management of the Apprenticeship Levy.) Stephen Evans, CEO Learning and Work Institute, gives an excellent assessment of it here.

But, I’m baffled by the failure to address the cuts to in work benefits, and the absence of any mention of active labour market policy (i.e. employment programmes) from the party that pioneered them in the 1990s is a matter of extreme concern.

Playing the odds though, let’s take a closer look at the Conservative manifesto, where we find that:

They're done with radical welfare reform

Thank goodness, we might say. However, the damage inflicted on our customers by previous harsh reductions in both out of work and in work benefits will continue to be done. Poverty is not about character, it’s about cash - and taking away money from people who don’t have very much anyway is not going to help change their situation.

They're hoping to reduce the disability employment gap

There’s more aspiration, pledging and reliance on the benevolent power of the market to sort things out than there is a clear strategy, programme or funding. The Work and Health Programme should make a small dent on moving more disabled people into the workplace, but it’s going to be tough. There’s a pledge to offer more advice and support to employers ‘to hire and retain disabled people and disabilities’ but no evidence of how that will be done or how it will be paid for.

They're up for incentivising employers

Far more substantial is the offer to support or incentivise employers in recruiting disadvantaged and long-term unemployed people through a one-year holiday on National Insurance Contributions. This is good news, but how well it will be sold to employers is anyone’s best guess (remember the Youth Contract anyone?) It would be a really useful tool to support the delivery of an employment service, but we are going to have a lot less of them.

They’re aware of the EU funding gap

Crucially, there is a recognition that the structural funding we receive from the European Union makes a critical contribution to tackling economic and social inequality in the UK. There is a commitment to use the structural fund money that comes back to the UK following Brexit to ‘create a United Kingdom Shared Prosperity Fund.’There’s no suggestion of how much this will amount to and we need to press for clarity on this. There will be a consultation with devolved administrations, local authorities, businesses and public bodies on the ‘design of the fund’ and we need to make sure the needs of our customers are at the heart of it.

There’s a real drive on productivity and skills

The Apprenticeship Levy will remain the centrepiece of this drive. There’s a ’national retraining scheme' to help people ‘remain in secure work’ by giving all employees the right to request leave for training, with the government meeting the costs of retraining. There’s - once again - no detail on what the scope or funding envelope for this scheme will be. There is the commitment that employers will be able to use Apprenticeship Levy funds to cover wages during training - which can only put more strain on the Apprenticeship Levy and raise the unrealistic expectations further of how much can be done with that cash. Yet another example of robbing Peter to pay Paul?

It’s absolutely critical that we invest in people’s skills for the future, to raise productivity, drive wage growth and support progression (which will, in turn, open up entry level opportunities for new labour market entrants.) But, there is rightly concern that the increasing focus on those in work will mean that those out of work will be left further behind. Nick Linford has highlighted in FE Week that the focus for apprenticeship starts is shifting towards the over 35s and those already in work - pointing out that in the Standards pilot the level of under 19 participation is collapsing. This is not good news for young people, who need a first rung on the ladder.

We need to do what we can to ensure that this increased drive to invest in the future skills of the workforce is: 1) adequately resourced; and 2) is targeted on those out of work, as well as the existing workforce.

There’s still no money

Last of all, there will continue to be a lot less money from central government to fund employment related services. The Work and Health Programme and its devolved cousins in London, Greater Manchester and Scotland will go ahead - with a funding envelope around 80% smaller than the previous cycle of employment programmes. Jobcentre Plus will be asked to transform itself and serve more people with a higher degree of success than before - with less resource to do so.

I’ve written before about the potential, serious impact of the extreme funding reductions being made in contracted and public employment support services. One of the many impacts will simply be - in many places - a lot less support potentially available to those who need it most.

I’ve also written previously that, in the face of this, we need to innovate - both in terms of our delivery and our income generation. That challenge remains open to the sector and we need to step up and meet it. Because the need for our expertise remains - and will continue to remain - high.

Yes, unemployment is the lowest it has been in a decade (i.e. since the bottom fell out of the economy in 2008) but there are still almost half a million long-term unemployed, almost 600,000 unemployed young people and higher rates of unemployment amongst key disadvantaged groups, including the disabled and particular ethnic minority communities and in specific geographies (including the North East, the West Midlands and London.) None of that looks good in terms of creating a ‘stronger economy and a fairer society’, which is apparently Theresa May’s mission.

Yes, employment is at a record high. But, productivity is low and wage growth has downturned in the face of rising inflation. Particularly - but not exclusively - at the lower end of the labour market, people are working in insecure circumstances, often trapped in a vicious low pay, no pay cycle.

And the economy remains brittle, post-referendum, with sterling down and the great unknown impact of Brexit still to come. It’s hard to find an economist who doesn’t believe that this will be negative. What happens then? Whatever does happen, we need to make sure we are all still around, because an awful lot more people might need our support and expertise.

If you are an employer organisation that provides employment related services, IEP can raise your performance through qualifications and training. It supports the continued professional development needs of your management teams and frontline staff.